KfW, the German Development Bank, has targeted a loan commitment of EUR500 million (US$692 million) per year for development projects in Vietnam, up from EUR200-300 million per year over the last two years.
“It has not been done yet, but our target depends on the criteria to be met by Vietnam,” said Dr Ulrich Schroder, CEO of KfW, a state-owned German bank.
“We see a huge potential for Germany and other European countries to invest in Vietnam”.
However, to have more access to financial assistance like Official Development Assistance (ODA), Vietnam needs to simplify administrative procedures, fight corruption and improve its secondary school and higher education system, he said.
In addition, he noted that the energy and health sectors remain dominated by the State sector.
“So it’s a good thing for the country to open these sectors to the foreign private investment sector,” he said. “Of the loan commitment, we would focus on long-term investments such as energy like wind power, infrastructure, roads, and the health and education sectors.”
He added that German companies believe Vietnam has huge potential in IT and software, and are interested in investment in these areas.
Germany provides loans for Vietnam in several fields, including a metro system, forestry, secondary education, microfinance and the electricity sector.
Commenting on the slow progress of the Metro’s Line No. 2 in HCM City, Schroder said that the project had to deal with geographical and geological issues just as metro projects in other countries do.
In general, the delay of projects in Vietnam is often due to complicated administrative procedures as well as corruption, he added.
Vietnam is KfW’s third-largest strategic partner in Asia, following China and India.
Total investment capital that KfW committed to Vietnam has reached EUR1.2 billion (US$1.66 billion), with a total of 71 projects, of which EUR594 million (US$822 million) has been disbursed.